Wayne LaPierre, the controversial chief executive of the National Rifle Association, said on Wednesday that he had kept his organization's recent bankruptcy filing secret from nearly all senior officials, including the general counsel, chief financial officer and top lobbyist. He also has the most members of the board of the N.R.A.
Mr. LaPierre made the comments after practically taking his stand in a trial before federal bankruptcy court in Dallas. Although the N.R.A. solvent, it filed for bankruptcy protection in January in a daring attempt to bypass regulators in New York, where the N.R.A. has been chartered for a century and a half.
The state attorney general Letitia James had sued the association in August in an attempt to shut it down amid claims of mismanagement and corruption. She is also seeking tens of millions of dollars in mis-spent funds from Mr. LaPierre and three other current or former N.R.A. leaders.
The nonprofit has been embroiled in a scandal for the past two years, with revelations of lavish spending by the N.R.A. and his contractors – on Zegna suits and luxury travel, Mr. LaPierre went to places like Lake Como in Italy and the Atlantis Resort in the Bahamas. Other benefits included chartered jets for him and his family and vacations on a contractor's yachts called Illusions and Grand Illusion.
Bankruptcy proceedings have become the latest referendum on Mr. LaPierre's 30-year tenure at the Gun Rights Group – recently ravaged by infighting – as it seeks to turn the battle with the New York Attorney General into a battle for freedom of speech instead of free benefits. .
“We have filed for bankruptcy in order to find a fair legal playing field, where N.R.A. could thrive and grow in a fair environment, unlike what we believe had become a toxic, armed, politicized government in New York State, ”said Mr. LaPierre in his testimony.
The association intends to use the bankruptcy to re-record in Texas. Mr. LaPierre kept the application secret, fearing leaks would jeopardize the plan.
But the attorney general's office and the N.R.A.'s biggest creditor, former advertising agency Ackerman McQueen, want the case dismissed – claiming that the filing, and in particular the lack of notice to the board, was highly inappropriate.
"The procedure Mr. LaPierre took to file this bankruptcy case is itself a masterclass in bad faith and dishonest behavior," said Monica Connell, an assistant attorney general.
The process, part of bankruptcy proceedings, began on Monday to determine whether the case will go ahead.
For two years of unrest prior to the trial, the N.R.A. had gone unusually quiet, shut down its fire-breathing media outlet, NRATV, and said goodbye to former spokeswoman Dana Loesch. It was also largely silent during the 2020 presidential election, after playing a key role in the 2016 election of Donald J. Trump.
But the organization remains a powerful lobbying force that has reshaped the political landscape around guns. His lasting influence was seen in the aftermath of two recent mass shootings, in Atlanta and Boulder, Colo., When calls for gun control met stiff Republican opposition and Senate filibuster reality.
However, bankruptcy is a risky gamble for the N.R.A. and a sign of his despair. Mr. LaPierre and his outside attorney, William A. Brewer III, an architect of the filing, could lose control of the organization. In one possible outcome, if the case is not outright dismissed, the judge, Harlin D. Hale, could oust current management by appointing a trustee to manage the day-to-day operations of the N.R.A. takes over. The use of a trustee is rare in large corporate bankruptcies and usually only occurs in cases of fraud, incompetence, or gross mismanagement.
Gregory E. Garman, an N.R.A. attorney, who argued in court this week against such an outcome, saying, "a trustee is in fact a death sentence."
The argument that a trustee is the future of the N.R.A. deceiving our purpose and our role, ”said Mr. Garman.
The N.R.A. seized the lawsuit to claim that the group reformed after a number of modest blunders in the review. "Compliance has become a way of life at the National Rifle Association," said Mr. Garman, acknowledging that there would be "reasonable cringe" moments in the process.
But those moments undermine claims of reform. One of the issues raised during the proceedings is that Mr. LaPierre's longtime assistant Millie Hallow was detained even after diverting $ 40,000 from the N.R.A. for personal use, including to help pay for her son's marriage. (Before she was hired by the N.R.A., Mrs. Hallow pleaded guilty to a crime related to the theft of money from an art agency that ran them.)
The role of John Frazer, the N.R.A.'s general counsel, also came under scrutiny when it became known that he had no previous experience in such a role and had only two years of private practice. He was left in the dark about important legal decisions, even though he is the organization's principal attorney, and was not informed in advance by Mr. LaPierre that the N.R.A. filed for bankruptcy. According to a former assistant, Mr. LaPierre once said he wouldn't use Mr. Frazer "for my parking tickets." In a preliminary statement, Mr. LaPierre acknowledged that he may have once made the comment as "a joke."
Mr. LaPierre himself admitted to making mistakes, including not reporting his use of the luxury yachts.
"I now believe it should have been made public," he said.
His testimony is expected to continue on Thursday.